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2 HFO INVESTMENT REAL ESTATE2 HFO INVESTMENT REAL ESTATE
INVESTMENT SUMMARY
OFFERING SUMMARY
Tours and Inquiries: All tours and inquiries regarding 365 16th Street SE are to be directed to HFO Investment Real Estate at (503) 241.5541.
Peyton King • [email protected]
Adam Smith • [email protected]
Greg Frick • [email protected]
ASSET SUMMARY
Address 365 16th Street SE City, State Salem, OR 97301 County Marion Year Built 1901 Total Units 6 Approx NR Sq Ft 3,800 sq ft Avg Unit Size 633 sq ft
PRICING
Per Sq Ft $112
Projected Cap Rate 5.94%
365 16th Street SE is a 6-unit value add community located in the heart of Salem, Oregon. The units feature central heating, laminate flooring, spacious floor plans, and modern amenities.
The property consists of five one- bedroom units and single two-bedroom and one-bathroom unit. The property boasts a large parking lot behind the building for tenant’s use. Capital improvements to the property consist of new water heaters and updated electrical services.
The property is located just off of 16th Street, east of Aldrich Park. The property is situated a half-mile away from Willamette University, and just a short 15 minute walk to the Capitol Building. With quick access right into downtown Salem the property is surrounded with an abundance of retailers and restaurants. The relaxing residential neighborhood is desirable for tenants and investors alike.
4 HFO INVESTMENT REAL ESTATE
Property Highlights
• Lush landscaping
INVESTMENT HIGHLIGHTS
UNIT MIX # of Units Bed Baths Square Foot Total Sq Ft % of Sq Ft
5 1 1 600 3,000 78.9%
1 2 1 800 800 21.1%
6 TOTAL/AVERAGE 633 3,800 100.0%
5365 16TH STREET • 6 UNITS • SALEM, OR
NEED UPDATE
LOCATION
RENTAL TRENDS The Multifamily NW Spring 2020 apartment market survey of 13,038 apartment units reported that Salem and the surrounding vicinity showed a 3.7% vacancy rate, down from 4.62% the year before. Rents per square foot were up slightly from 2018 – the area reported average rent rates of $1.29 per square foot.
EMPLOYMENT
Salem is the capital city of the state of Oregon, and the county seat of Marion County. It is located between Portland metro area and the city of Eugene, along the I-5 corridor. Salem’s metro area includes Marion and Polk counties.
SALEM, OREGON
The largest employer is the State of Oregon
In August of 2017, Amazon announced it would open a $90 million, 1 million square foot facility in the Mill Creek Corporate Center in Salem. The center opened in 2019, and as of May 2020 employed around 1,000 workers. Amazon was attracted to the area in part because of the Enterprise Zone initiative, which provides three years of property tax breaks for the site. In 2018, Amazon announced it would adopt a $15 per hour minimum wage.
Salem also has a burgeoning beer industry. In the Fall of 2017, three new breweries opened in the city. Xicha Brewing opened the first Latin American brewery in Salem, and local breweries Bine Valley and Ratchet Brewery are also opened their doors at that time.
In addition to large corporations, universities, hospitals and public-sector employment, smaller businesses make up most of the Salem area’s employment picture. In March, prior to the pandemic-related recession, Salem’s unemployment rate was 4.1%.
Government Jobs
Education and Health
17% Retail Trade
11% Professional Services
ECONOMIC DEVELOPMENT Thriving businesses abound in Salem. The city’s Strategic Economic Development Corporation (SEDCOR) is the lead economic development agency for Marion and Polk Counties. This private, nonprofit membership organization’s mission is to enhance and diversify the Mid-Willamette Valley area’s economy. In its 2018 annual report, SEDCOR reported that it stimulated over $25 million in new investment, and assisted with retention and creation of 497 jobs.
POPULATION According to the US Census, the Salem metro area’s population increased by 11% between 2010 and 2019, growing from 390,738 to 433,903. The city of Salem itself saw a population increase of 12.5% over that same period. Salem’s owner- occupied housing rate is 46.7%, and median household income as of 2018 was $53,619.
RECREATION Salem’s recreational attractions include its riverfront carousel and its vintage Enchanted Village theme park, plus water-based activities along the Willamette River, including kayaking, boating fishing and water-skiing. Oregon’s history can be seen via the state capitol building, Willamette Mission State Park and the Historic Deepwood Estate.
SALEM, OREGON
Minto-Brown Island Park
OPERATIONS ANALYSIS
Income August 2020 T8 Months Annualized Current Scheduled Rents Projected Operations
Scheduled Gross Rent $43,187 $7,198 $53,220 $8,870 $53,700 $8,950 Less: Vacancy/Credit Loss $0 $0 -$2,661 -$444 -5.0% -$2,685 -$448 -5.0%
Net Rental Income $43,187 $7,198 $50,560 $8,427 $51,016 $8,503 Other Income $0 $0 $0 $0 $0 $0
Includes: Laundry $0 $0 $0 $0 $0 $0
Gross Operating Income $43,187 $7,198 $50,560 $8,427 $51,016 $8,503
Expenses August 2020 T8 Months Annualized
Per Unit Projected Operations
Per Unit % GOI
Real Estate Taxes $3,590 $598 $3,591 $598 7.1% $3,591 $598 7.0%
Insurance $1,394 $232 $1,400 $233 2.8% $1,400 $233 2.7%
Total Utilities $5,471 $912 $5,471 $912 10.8% $5,471 $912 10.7%
Fee Management $4,497 $750 $5,056 $843 10.0% $5,102 $850 10.0%
Landscaping $2,700 $450 $2,700 $450 5.3% $2,700 $450 5.3%
Maintenance/Repairs $2,596 $433 $4,500 $750 8.9% $4,500 $750 8.8%
Turnover $0 $0 $1,500 $250 3.0% $1,500 $250 2.9%
Reserves $1,500 $250 $1,500 $250 3.0% $1,500 $250 2.9%
Total Expenses -$21,748 -$3,625 -$25,718 -$4,286 -50.9% -$25,764 -$4,294 -51% Net Operating Income (NOI) $21,439 $3,573 $24,842 $4,140 49.1% $25,252 $4,209 49%
OPERATIONS ANALYSIS 365 16TH STREET • 6 UNITS • SALEM, OREGON
Income August 2020 T8 Months Annualized Current Scheduled Rents Projected Operations
Scheduled Gross Rent $43,187 $7,198 $53,220 $8,870 $53,700 $8,950 Less: Vacancy/Credit Loss $0 $0 -$2,661 -$444 -5.0% -$2,685 -$448 -5.0%
Net Rental Income $43,187 $7,198 $50,560 $8,427 $51,016 $8,503 Other Income $0 $0 $0 $0 $0 $0
Includes: Laundry $0 $0 $0 $0 $0 $0
Gross Operating Income $43,187 $7,198 $50,560 $8,427 $51,016 $8,503
Expenses August 2020 T8 Months Annualized
Per Unit Projected Operations
Per Unit % GOI
Real Estate Taxes $3,590 $598 $3,591 $598 7.1% $3,591 $598 7.0%
Insurance $1,394 $232 $1,400 $233 2.8% $1,400 $233 2.7%
Total Utilities $5,471 $912 $5,471 $912 10.8% $5,471 $912 10.7%
Fee Management $4,497 $750 $5,056 $843 10.0% $5,102 $850 10.0%
Landscaping $2,700 $450 $2,700 $450 5.3% $2,700 $450 5.3%
Maintenance/Repairs $2,596 $433 $4,500 $750 8.9% $4,500 $750 8.8%
Turnover $0 $0 $1,500 $250 3.0% $1,500 $250 2.9%
Reserves $1,500 $250 $1,500 $250 3.0% $1,500 $250 2.9%
Total Expenses -$21,748 -$3,625 -$25,718 -$4,286 -50.9% -$25,764 -$4,294 -51% Net Operating Income (NOI) $21,439 $3,573 $24,842 $4,140 49.1% $25,252 $4,209 49%
OPERATIONS ANALYSIS 365 16TH STREET • 6 UNITS • SALEM, OREGON
1. RENTS Rents are based on a August 2020 rent roll and an average of $739 per unit or $1.17 per sq ft. Projected rents are based on market rate increases.
2. VACANCY The projected operations include a market-rate vacancy of 5.0%.
3. OTHER INCOME The property is currently not collecting any other income.
4. PROPERTY TAXES Oregon’s property taxes are evaluated on a fiscal year starting July 1. In Oregon, property taxes are not reassessed on sale and are limited to a 3.0% annual increase at the state level. Property taxes paid prior to November 15 each year receive a 3.0% discount. The gross property taxes 365 16th Street SE for the 2019-2020 tax year totaled $3,702. After deducting the 3.0% discount, net property taxes totaled $3,591. This amount is reflected in adjusted operations.
5. FEE MANAGEMENT The management fee has been projected at 10.0% of GOI, which represents standard independent, third-party management costs for properties in the metro area similar to the 365 16th Street SE.
6. RESERVES Lenders require that reserves be set aside to address future capital costs associated with any property as it ages. We have included reserves of $250 per unit or $1,500 annually in projected operations.
Type Units Count Avg Sq Ft Average Scheduled
Rents Scheduled Rents per
Rents Scheduled Rents per
Sqft 1 Bedroom / 1 Bathroom 5 600 $722 $1.20 $725 $1.21
2 Bedroom / 1 Bathroom 1 800 $825 $1.03 $850 $1.06
Total/Average 6 633 $739 $1.17 $746 $1.18
OFFER TERMS
QUESTIONS & TOUR REQUESTS:
All inquiries, questions, or tour requests are to be directed to HFO Investment Real Estate at (503) 241.5541.
Please do not disturb the residents.
Peyton King • [email protected]
Greg Frick • [email protected]
Rob Marton • [email protected]
Tyler Johnson • [email protected]
Jack Stephens • [email protected]
Lee Fehrenbacher • [email protected]
Todd Tully • [email protected]
Steve Wendt • [email protected]
Michelle Swan • [email protected]
HFO Investment Real Estate 2424 SE 11th Avenue Portland, Oregon 97214
www.hfore.com (503) 241.5541 Fax: (503) 241.5548
Brokers licensed in the States of Oregon and Washington.
OFFER TERMS PRICING
Per Sq Ft $112
Projected Cap Rate 5.94%
ASSET SUMMARY Address 365 16th Street SE City, State Salem, OR 97301 County Marion Year Built 1901 Total Units 6 Approx NR Sq Ft* 3,800 sq ft Avg Unit Size 633 sq ft
HFO Investment Real Estate
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